Wrapping up yet another stellar year, Fleet Feet Inc. reported fourth-quarter comparable store sales grew 11%. For the full year, sales reached $96 million on a 10% comp gain. The 2009 gain comes on top of a 12% hike in 2008 and a 15% surge in 2007.
Fleet Feet, Inc. President Jeff Phillips said the franchisor, which held its annual Winter Franchise Conference in New Orleans, said its 2009 results were helped by new customer acquisition. Particularly beneficial has been the success of its No Boundaries program, which had over 10,000 participants in only its second year. “That's all new customers!,” said Phillips.
He also said Fleet Feet's franchisees benefited from their commitment to Fleet Feet's FIT process and the overall custom experience, as well as a renewed focus on financial and inventory management amid the downturn. Toward that end, Fleet Feet initiated a new service called CFO in a Box that allows Fleet Feet to manage individual stores financials through software and a remote server.
“We already have about one-third of our stores up and running on this system,” said Phillips. “This allows our operations staff to review information on an ongoing basis to ensure we make good financial decisions and ultimately drive profitability.”
But Phillips also noted that top-line sales continue to benefit from strength in running even though the running specialty channel has become more challenging for some.
“The running category is definitely healthy,” said Phillips. “I think the bigger question is how healthy are running retailers? There is a definitive segmentation taking place across the specialty channel. There are stores that are innovative and have a constant stream of new ideas and initiatives to improve their business. These stores tend to do well regardless of what’s happening in the macro economy. There are other stores that are doing the same things they have always done and they are at risk.”
Among brands, Saucony racked up 18% growth in units sold for the year, driven by improved product and strong service and support to stores, said Phillips. The brand also earned Fleet Feet's 2009 Footwear Vendor of the Year award. “This solidified its number three footwear market-share position and closed the gap on the top two brands, Asics and Brooks,” said Phillips.
Another standout was Nike, up 18.5%, which Phillips felt reflected the footwear giant's “commitment to a relationship with our brand and improved products.”
New Balance saw marginal growth while restructuring for success in running specialty channel, according to Phillips. “Their commitment to the channel and support for our No Boundaries program has positioned them well for growth in 2010,” added Phillips.
Mizuno maintained its market-share position in 2009 while adidas reversed a downward trend with 20% growth off a relatively small base. Pearl Izumi was another brand that saw significant growth off a small base, moving into the number eight market share position at the retailer.
But Phillips noted that while smaller footwear brands continue to enter the market, few have made a significant impact on its shoe fitting floors.
“All of the major brands are trending towards minimalism which we anticipate will put great pressure on brands with limited resources that are trying to play in this limited space,” said Phillips. “Great product is the common factor amongst the top brands today. The difference is being made in support and service initiatives and specifically [impact] customer acquisition.”
On the apparel side, Nike, Brooks and Moving Comfort are still Fleet Feet's major resources. Phillips did note that Asics saw some “significant movement” in apparel off a small base.
Accessories were a particular bright spot with healthy growth and profitability in 2009, according to Phillips. Superfeet inserts grew 34.5%, driven by Fleet Feet's FIT Process and the training of staff in the fundamentals of biomechanics, anatomy and gait. With the ramping up of resources against its FIT training, another strong year in inserts is expected for 2010. Balega socks saw 18% growth, fueled by growing staff and customer confidence in the brand.
“All brands supported in our sock and accessory areas are experiencing growth thanks to our stores mindset transition from viewing these products as add-ons to an integral part of the FIT equation a viewpoint strongly supported in our customer feedback,” said Phillips.
Regarding real estate, Fleet Feet transitioned ownership in five existing stores and opened two new stores. Three stores were closed. Said Phillips, “While the business as a whole continues to grow and thrive, we have not been completely immune to individual store challenges.”
Specialty Retail Development Company (SRDC), a separately run company set up to acquire and open Fleet Feet stores, acquired three existing Fleet Feet stores. SRDC also acquired and converted two independents and opened its first new store in Huntersville, NC.
Looking to 2010, Phillips said new store growth will continue to be driven by SRDC acquisitions and conversions.
“We will continue to focus on supporting the growth and development of our existing stores,” said Phillips. “Specifically we're looking to make our store owners lives easier and increasing their profitability.”
